QUESTION: The last time we spoke it was on the eve of your first summit season and in Buenos Aries there was a temporary truce between the US and China and the world breathed a sigh of relief. Since then, as you point out, things have gotten a whole lot more adversarial. What would be your message when you meet with Presidents’ Xi and Trump this time?
PRIME MINISTER: Well, just as I’ve outlined it, and that is that this is the defining bilateral relationship. Not just in the global economy, but obviously more broadly than that. That independent sovereign states that sit around the G20 table, we will continue to do what we do. Perform our responsibilities, engage with each other, and respect our various relationships and partnerships. But ultimately, the context in which we do all that is very much determined by the strength of that relationship and its efficiency and that there is a broader global interest that they’re a beneficiary of, that there’s a bigger dividend beyond the deal between the United States and China that they benefit from by ensuring that this can be landed. Now, I’ve always been quite an optimist. I was an optimist on this going into Buenos Aries, it is my natural disposition and I remain of that disposition. That doesn’t mean that I’m not cognisant of the risks. Of course they’re there. But we do need to be able to move forward on this., I welcome the fact that in Buenos Aries they were able to start a conversation, it’s moved back since then, you’re right. But here’s another opportunity I think to re-engage it. But I think it’s important for both to come to the table, recognise that there are some genuine issues. We can’t deny those, they have to be acknowledged, and that’s why I sought to that again today and we are looking at them to put that broader global economic interest to the fore, which is what the G20’s all about by the way. It’s not the G2, it’s the G20 and for those two nations to create a context for a broader global prosperity of which they will be key beneficiaries. They will benefit more than anyone, anyone by the global economy getting stronger.
QUESTION: It’s not the G2, but having said that going into Buenos Aries there were a lot of concerns that we were not even able to get a communique that everyone was happy with and in the end I believe certain stronger language on trade was dropped largely because of the US. I’m wondering if you take a step back and we look at this not just about trade because I think it’s uncontroversial that more trade, fairer trade is good for everyone, it’s win-win. If you look at this as the key strategic battle of our time between an old superpower and a rising superpower that spans not just trade but geopolitics and security all aspects of diplomacy, are you still as optimistic?
PRIME MINISTER: Well, we’ve seen this before and it’s been mishandled in the past but I have greater faith in our ability to move on from these things in the past. In my presentation I was quite specific about the global leadership provided by the United States in creating a post-world, Second World War environment that led to the greatest economic expansion the world has ever seen, and within that occurred arguably, if not unarguably, the biggest economic miracle we’ve ever seen. So there is too much at stake. And call it my sort of great faith in vested interest, but the vested interests action will also determine this is sorted. And I’ve always held the view that the US leadership - and I would certainly hope and expect the Chinese leadership - can see the merits in landing this, and it may take longer than we’d hoped, but so long as we’re always making progress then I think that is cause for optimism.
QUESTION: What does Australia do in all of this? There’s lots of concerns that at some point and it’s already happening in some, depending on who you speak to, that Canberra’s being forced to choose between our strongest, most powerful traditional ally and our greatest trading partner. So how do you deal with that pressure and what is not taking… sitting back and letting collateral damage happen?
PRIME MINISTER: Well, I reject that suggestion. I reject the requirement to participate this in a binary way. I think it’s a false framework and it’s not helpful. It’s driven by a demand to see every issue in term of conflict rather than resolution. And I think Australia and my Government is going to be very positive in rejecting that dynamic. Because I don’t think it’s helpful. I don’t think it’s a helpful analytical framework. I don’t think it’s a helpful commentariat framework. Yes, it gets people excited about the possibility of conflict - or interested is probably the better way, rather than calling it excited - and that can generate interest. But what we’re interested in is having a peaceful and stable world and I think when those sort of frameworks are imposed on you as a sensible, mature, reasonable nation, then you call them out. Which is what I’ve just done. So many times I pick up various analyses which talk about the inevitability of where this is and I find that fatalism very unhelpful, certainly to Australia’s interests but more broadly. We are more capable of more than that. How do I know that? Because of our history, particularly post the Second World War. It demonstrated… I mean, we honestly don’t reflect enough on how much was achieved. I’m not kidding when I say when I’m sit there next to the German Chancellor, having spent time also with Prime Minister Abe and seen what the world has achieved when it put its mind to it. When it can actually see past just its own interests and see the bigger picture. It’s happened before. It’s also been ignored before and we know where that ends I don’t think anyone wants to go there.
QUESTION: We know that relationship with Beijing have been strained in recent years, do you see that improving? Do you see sources of tensions continuing?
PRIME MINISTER: You mean between Australia and China? Yes, I see that improving. And we’re very happy for it to improve. We have record levels of trade, we have records levels of engagement, and I stress again that there are 1.2 million Australians of Chinese heritage here in Australia. It’s a very large diaspora and it is one that’s been here for a very long time and played an enormously important role in Australia’s development and a big part in Australia’s outlook. The Chinese Australian community through its entrepreneurialism, through its hard work, it’s commitment to family - these values which have been the bedrock of our country’s success are closely associated with our Chinese diaspora community of citizens in Australia. So I think that provides the foundation for something absolutely magnificent.
QUESTION: The G20, as you head off to Osako, is founded against the backdrop of containing the Global Financial Crisis, stronger together, if you will. Are you realistically optimistic that something can be achieved over the next few days, given that things both economically and in terms of the global growth trajectory as well as the geopolitical front have significantly worsened over the past year?
PRIME MINISTER: I think it will help, and that’s the point of the G20. Sometimes these global multilateral forums seek too much from themselves, and they build up architectures and bureaucracies and agendas that frankly can sometimes distract them from what their key goal is, which is actually to come together at this senior level. You’re right, it started out as a Finance Ministers’ forum and I had the privilege of participating in that as a Treasurer for three years. And we can look back at what was achieved post the GFC through the combination of efforts by both senior bankers and nations sat around the G20 table and I think they can be pleased with what was achieved. The G20 achieved, I think, a great deal in that process. But its virtue is its existence. It doesn’t need to have, you know, long running agendas. That’s, I don’t, think its purpose. Its purpose is to be able to deal with these issues as they arise, provide a framework to do that. Obviously these meetings provide lots of opportunities for other bilateral engagement and that’ll occur this weekend and I’m looking forward to that. So I’m always optimistic and positive and hopeful when people are meeting. So this weekend is another good opportunity for that. So it will help the process. Will it resolve it? I doubt it. Though I certainly think and expect and will be working to ensure that it helps it.
QUESTION: You spoke about this idea of a decoupling, and it’s an interesting one that eventually if this tussle turns into something longer term between the US and China that we might end up with two separate systems for technology, for trade, those are really part of the main spheres. Where does Australia end up in the middle of that and does there need to be more of a coherent, I guess, group strategy between Asian nations, we know the likes of Japan and South Korea are just as concerned, if not more concerned, about being caught up in the middle.
PRIME MINISTER: I mean, Kevin Rudd, I mentioned two other former Prime Minister’s today but I thought Kevin made some really interesting observations about this the other day, particularly when he juxtaposed decoupling against some of the Cold War rhetoric and I thought his analysis was pretty sound. The decoupling is an observation that I think many are making, but what we’re largely talking about is infrastructure, which has no moral quality. This is… everyone in China does not have to have…
QUESTION: The ban on Huawei though, that has a moral aspect to it?
PRIME MINISTER: I wouldn’t cast it is that term, no. What I’m saying is that everyone in China doesn’t need to be on Visa and Mastercard, and everyone in the United States doesn’t need to be on WePay in order for them to do business with each other. They can have different systems and that’s fine, so long as you have an overarching global trading system and an overarching global international system, whether it’s through [inaudible] or these types of arrangements then all these systems can talk to each other. I mean, China has a completely different payment platform to Australia. As it does with Vietnam, as it does with Canada and the United Kingdom. They’re all different. This is just infrastructure, this is just railroads in a different form, and what matters is the overarching connecting infrastructure that enables these nations to do business. So again, the leap that is always made, ‘Oh they have different payment systems, that’s a sign of division and tension.’ It’s such nonsense. It’s just nonsense. They’re just different systems, they’re allowed to have different systems and they do that for any number of reasons and that’s OK. So we just don’t have to leap these are expressions of hostility, they’re not.
QUESTION: There’s infrastructure but there’s also the intangible, that I think some would argue is even more damaging and that’s the impact on sentiments, on animal spirits, on the lack of certainty that investors have.
PRIME MINISTER: I’d agree with that. And that’s the points I’ve been making and I made this point on Monday in the speech I made in Perth this is why I’m highlighting this issue today. I mean, it was only a few years ago and it was actually in China I remember at the Finance Ministers meeting in the G20 at Shanghai and I remember it was the IMF making the point that the suppression or slow growth of merchandised trade was one of the biggest issues affecting the global economy at that time. Now, that wasn’t because of the issues that I’ve talked about today, that was because of a whole range of other issues and so that was seen as the key stat that really needed to be moved, the thing on the dial that we really needed to move. Now today, that is being impacted more by these tensions and political, not partisan, political factors and that has a real impact on the economy. That’s why it’s so important that this gets sorted. Because it is dampening consumer confidence, it is dampening business confidence, it’s inhibiting investors from looking out and seeing how they might apply their capital. Now that’s very important to Australia it is one… arguably, it’s the biggest economic risk Australia faces, is that broader outlook, and that’s why I’m making these points. Because it’s in Australia’s interests, Australia’s economic interests, to put it more bluntly - jobs, incomes, wages, buying homes, starting businesses that depend on a more positive outlook at that level. And so that’s why we will seek to do what we can to encourage resolution.
QUESTION: We talk at length about really Australia being really the golden child coming out of the GFC, 28 years now without a recession. There’s criticism that’s come from good luck rather than good management, and it’s hard to deny it’s come from a -
PRIME MINISTER: When things go badly it’s never bad luck. In the analysis, is it?
QUESTION: The China growth stories is a big part of that and that’s remarkable that most economists would say not something we’re likely to see repeated in our lifetimes, so what are the new drivers of growth and is Australia well prepared for that?
PRIME MINISTER: Well, yes is the short answer to that. Whether it’s at the same proportions or not only time will tell. I mention a lot about ASEAN. I mean, when you think about ASEAN and its constituent members and you think about some of the smaller nations and those who are going to develop and hopefully will - nations like Cambodia, like Myanmar - I mean, the potential there is quite significant. There’s obviously some big hurdles there to overcome but the potential in particularly the ASEAN region for significant growth and development is very strong. We’ve always understood that, we’ve always understood for decades. Our engagement with Asia did not begin just recently, it goes back a long way. I just had the opportunity more recently to reflect on and read through John Howard’s book on the Menzies era, and I commend those chapters that talked about the early initiation that occurred soon after the Second World War. Overcoming very significant local and domestic anxieties about our engagement with Asia but that government pressed on and all governments since have, and I think that has developed and understanding and an awareness and preparedness in the Australian economy to engage with those high growth areas of the global economy. And that’s why I think we enjoy the relationships we do in all of those countries today, and to look into furthering that into the future. So that global outlook… I mean, we’re up to around over 70 per cent now of our two way trade covered by trade agreements. It was 26 per cent when we came to government a little while ago, five and a half year ago and that’s going to get to 90 per cent by 2022 and that’s going to be a big part of our preparedness. Lowering the tax burden in Australia, both on small and medium business and on individuals, is going to be an important part of that process. Our infrastructure development that the deputy Prime Minister Michael McCormack leads, that is a key part of our plan. The deregulation initiative that I announced on Monday, that will be a key part of ensuring that there is no sclerotic impact on how we attract investment. I mean, attracting investment now I would argue is Australia’s biggest objective because that’s what drives the jobs, and we need to create more jobs because I said on Monday, the natural rate of unemployment which is the full employment rate now is believed to be closer to 4.5 per cent unemployment rather than 5, and that means more jobs have to be created to keep the tension in the cord in terms of wages. And so my key focus and the focus of the Treasurer and the entire team is creating the jobs, and that requires investment to flow, projects to hit the ground and that’s why these broader global issues are so important.
QUESTION: And a significant part of that is obviously, as you mentioned earlier on in your answer, multilateralism in trade which for a while there had sort of fallen out of vogue if you will in favour of bilateral agreements. You talk about the TPP from which the US has spectacularly withdrawn after many rounds of negotiations, you talks about RCEP which is a China led initiative.
PRIME MINISTER: I’d say ASEAN but -
QUESTION: Is the sort of viewed as taking a side?
PRIME MINISTER: No, why would it?
QUESTION: It’s very unlikely that the US would return to the TPP or return or return or join RCEP, whereas there’s talk about China eventually joining the Trans-Pacific Partnership
PRIME MINISTER: This is my point, I don’t understand why… that’s a very binary way to look at it, and that’s my point. We’ll be part of RCEP, we have a free trade agreement with the United States. I didn’t find it particularly surprising that the United States pulled out of the TPP because that’s what the President actually took to his election, but what was important about our response was that we kept going. We did so with New Zealand, we did so with Japan and I think that was one of Prime Minister Turnbull’s achievements, was seeing that through and I pay great credit to him for that, as I do obviously to Tony and what he was able to do with Andrew in terms of the agreements. So we pursue all of these things not thinking, “Well, the great powers will have their view and their participation.” Good for them, and we welcome their involvement when they want to do it and when they don’t want to do it, well, they’ll make that decision for their own interest. But our interest is we’re into all of them. Stand still with us for five minutes and we’ll do a trade deal with you. Here is the next one. UK post-Brexit. Our future has always been - not that we’ve always acknowledged it for a long period in our history - but it’s always been true. Investment, immigration, trade. Why we’re 28 years of uninterrupted economic growth, there’s three pretty big reasons.
QUESTION: You complimented before one of your predecessors. Kevin Rudd was one of the biggest criticisms of the current Government, the Turnbull Government not having a coherent comprehensive China strategy, has that changed?
PRIME MINISTER: I don’t know, you’ll have to ask him. I’m sure he’s always up for a comment.
QUESTION: I’ll wager his view hasn’t changed, but has the strategy changed?
PRIME MINISTER: Has our strategy changed? I think we’ve continued to maintain quite a consistent position on all of these questions, and I would say across governments and across the partisan divide. It’s always been our interest to engage since that process began with China, and we’ve all sought to add to that, to greater or lesser effect. We’ve all sought to add to ASEAN. What I found particularly encouraging when I was at the East Asia Summit and it was the ASEAN plus Australia meeting, and Martin was there, was ASEAN’s respect for Australia as not being a fair weather traveller. We’ve always supported ASEAN, we’ve always been a part of it, we’ve always encouraged it, and I think that - I would hope - that when governments have been in power, they’ve always pursued that. So there’s been a consistency, and I’ve always believed that there’s been a much greater consistency than, at least in a commentary sense and often within Australia, than it’s given credit for.
QUESTION: Studies have shown that there’s been a growing level of distrust in Australia in regard to doing business in China and the relationship with China. Does that make it difficult for your government to be able to navigate these murky waters?
PRIME MINISTER: I think that’s a normal function of a lot of the things that I’ve spoken about today. I mean, if you go back many years ago and when a lot of the new issues that are coming into the relationship that make some of these issues difficult, that’s to be expected. They’re getting more multifaceted, they’re getting more complex, new technologies, all of this mean there’s more questions to respond to an answer in the relationship and you’ve just got to keep going back, I think, to the fundamentals of the relationship. And this is why again in relationship to China, I stress the people to people links. The people to people links between Australia and China today are greater than they have ever been before. 1.2 million Australians of Chinese heritage in Australia, that is a very sizeable connection and the yearly connection, whether it’s in visitation or in education or the many other literatures. This goes well beyond government’s talking to each other, this going to something quite different and that’s why at the end of the day that provides, I think, a very strong ballast for the relationship and something for both countries, both governments, to reflect on and ensure we’re doing the right thing with their aspirations.
QUESTION: The stepping up in the Pacific has been characterised by some as being one way to try to contain or assert greater control over China, which itself is trying to assert greater control within the Asia Pacific to counter the US traditional influence in the region. Do you think that’s a fair characterisation?
PRIME MINISTER: No I don’t. Again because it fails the test I’ve put today that seeks to solely explain our actions in this binary way. Why are we involved in the Pacific? Because they’re our family. I’ve had a lot of engagement with people in the Pacific over a long time, and it’s been a great privilege to be doing that now as Prime Minister. We owe a debt, particularly to our Pacific family and no greater than Papua New Guinea, that is incapable of expression. In one of our darkest hours they were the most compassionate and real friends, and that creates a special responsibility that goes so beyond this binary prism that frames things today. This is where we live. The interconnectedness between Melanesian and Polynesian and other peoples and Australia goes back and has a rich history. We simply want them to be independent and successful, have good health and better living standards and be able to just get on with their lives as they seek to and be able to do that free of influences. I think when Pacific nations look to Australia - and New Zealand as well I’d argue - they just see a friend who wants the best for them. We aren’t new to the Pacific, we didn’t all of a sudden just decide we want to be in the Pacific in the last couple of years. We’ve been there for a very long time.
QUESTION: So why now? Why now with the increased infrastructure investment, the increased…
PRIME MINISTER: For all the reasons I just said. Because that’s out responsibility and I want to see us meet those responsibilities. It’s, as my officials and staff know, it is a burning passion that I have for the Pacific.
QUESTION: You spoke about the importance of human agency in the speech, of self-determination, if you will. I’m wondering how that applies to what we’ve seen recently in Hong Kong. Should Australia be taking a stronger message to Beijing about how it handles these things?
PRIME MINISTER: Well, we’ve made our comments and I think they were appropriate comments. And others have made their comments as well and that’s Australia’s position, and we will obviously always continue reserve the right to express our views from time to time. As obviously China reserves their right to express views on things in Australia, and that happens and that never causes me any offence. That’s, I think, part of the give and take of relationships and I don’t think that’s uncommon. I think what’s important though is ultimately you’ve got to respect each other as independent, sovereign nations. That’s as true between Australia and China as it is between Australia and New Zealand. Granted, our differences with New Zealand tend to fall more on the sports field than anywhere else, but occasionally we might have a different view on lamb, and sports and how things like this are treated. This is what I’m seeing as I look across the Indo-Pacific. Countries with very different systems, very different histories, different webs of alliances and partnerships and trading relationships and capabilities. But you know what they all have in common? They all want to be independent sovereign states, being who they are, finding their own way and being able to do that successfully in the future living happily with everyone else. That’s the basis of the partnership and coalition that Australia is happy to be part of and to seek to try foster.